Oil executives before the Senate Finance Committee on Thursday. From left, John S. Watson of Chevron, Marvin E. Odum of Shell's U.S. division, H. Lamar McKay of BP America, James J. Mulva of ConocoPhillips, and Rex W. Tillerson of Exxon Mobile.Credit
Kevin Lamarque/Reuters

WASHINGTON — Executives of five of the largest oil companies on Thursday defended the $2.1 billion they receive each year in tax breaks, but said they would be willing to give them up as part of a comprehensive reform of the tax code.

At a three-hour Senate Finance Committee hearing that was largely political theater interrupted occasionally by a serious tax policy discussion, the oil industry executives said their current tax breaks were not subsidies but legitimate tax deductions, shared in some cases with other industries.

Rex W. Tillerson, chief executive of Exxon Mobil, said that the provisions, such as a tax deduction for certain types of manufacturing, were not “special incentives, preferences or subsidies for oil and gas, but rather standard deductions applied across all businesses in the United States.”

He said that eliminating the provision just for the oil industry would be “misinformed and discriminatory.”

Under questioning from Senator Max Baucus, Democrat of Montana, the panel’s chairman, Mr. Tillerson said that he would support repeal of the manufacturing tax credit and other tax incentives, as long as all businesses were treated the same.

“Repeal it for everybody, gone,” he said. “Everything for everybody everywhere ought to be on the table.”

At issue was a Democratic-sponsored bill to rescind roughly $2 billion of the $4 billion in tax incentives the oil industry now enjoys annually, with the money dedicated to deficit reduction. Mr. Tillerson shared the witness stand with top executives of the four other biggest multinational oil companies, John S. Watson of Chevron; Marvin E. Odum of the United States division of Shell; H. Lamar McKay of BP America; and James J. Mulva of ConocoPhillips.

Collectively, the five companies reported more than $35 billion in first-quarter profits, and are on a pace to set record profits for the year. Their profits, their tax treatment and gasoline that in many areas is over $4 a gallon have made them juicy targets for Democrats seeking political points and painless revenue.

The bill, which is expected to come to a vote on the Senate floor next week, is unlikely to command a filibuster-proof majority in the Senate. Even if it passes, it has little chance in the Republican-dominated House, which seems more inclined to provide the oil companies more access to public lands and waters than to clamp down on their tax incentives.

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Rex Tillerson, chief executive of Exxon Mobil, told the Senate Finance Committee his company's tax credits were legitimate.Credit
Stephen Crowley/The New York Times

Most Republicans, along with Democratic senators from energy-producing states, appear sure to oppose the plan. One oil-state Democrat, Mary L. Landrieu of Louisiana, said this week that oil and gas subsidies accounted for less than 13 percent of all United States energy subsidies.

The ranking Republican on the finance committee, Senator Orrin Hatch of Utah, suggested that Democrats were playing a cynical game, seeking to blame oil companies while, he asserted, intending to raise gasoline prices to force reduced consumption.

He called the hearing a “dog and pony show” and displayed a blown-up picture of a dog riding a pony, to underscore his argument that the hearing was just a chance for Democrats to score political points, without doing anything about high gas prices or a sensible energy policy.

Mr. Odum of Shell said in an interview after the hearing that he was disappointed that the discussion focused on the relatively small value of the oil industry’s tax breaks and not on the broader question of how to address the deficit and expand domestic production of oil and gas.

“The piece I take the most exception to, once you get past some of the theater aspects of the setting, is that it’s such a narrow view,” he said. “If the purpose is to address the deficit and the long-term health of the economy, the bigger picture is more important. And that is to produce more oil and gas and get the revenue streams and jobs from that.”

Brian Knowlton contributed reporting.

A version of this article appears in print on May 13, 2011, on Page B4 of the New York edition with the headline: Oil Executives, Defending Tax Breaks, Say They’d Cede Them if Everyone Did. Order Reprints|Today's Paper|Subscribe